Cement Industry

Introduction

The cement industry is literally the building block of the nation's construction industry. Very little new construction activity can be undertaken without the use of cement and concrete. Annual cement industry shipments are estimated at $11.9 billion for 2007. U.S. cement production is widely dispersed with the operation of 116 cement plants in 36 states. The largest company produces 12.6.% of the industry total, and the top five companies collectively produce 51.2%. Foreign companies now own 80.5% of U.S. cement capacity.

Cement Consumption

In 2007, the United States consumed 110.3 million metric tons of portland cement, reflecting a 9.5% decrease over 2006 levels. Most of this weakness was a result of weakness in residential construction. Residential construction spending was $829 billion in 2007, a 5.7% decrease from 2006 levels.

Approximately 74% of all cement shipments are sent to ready-mix concrete operators. Plants shipped 13.8% of the cement they manufactured to concrete product manufacturers, 6% to contractors, and 3% to building material dealers.

Cement consumption is seasonal. Nearly two-thirds of U.S. cement consumption occurs in the six months between May and October. The seasonal nature of the industry can result in large swings in cement and clinker (unfinished raw material) inventories at cement plants over the course of a year. Cement producers will typically build up inventories during the winter and ship them during the summer.

The cement industry is also regional in nature. Because the cost of shipping cement quickly overtakes its value, customers traditionally purchase cement from local sources. Nearly 98% of U.S. cement is shipped to its cutsomers by truck. Barge and rail modes account for the remaining distribution modes.

Imports Fill Production Gap

According to PCA estimates, U.S. cement plants achieved an average capacity utilization rate of 93.4% in 2007. Even at these high operating rates, domestic production cannot satisfy total United States cement consumption. The gap between domestic production and consumption was filled in 2007 by 22.7 million metric tons of imported cement and cement clinker. About 83% of cement and clinker imported in 2007 came from five major countries: China, Canada, Columbia, Mexico, and the Republic of Korea . Imports from China in 2007 declined to 7.5 million metric tons down 41.0% from 2006 levels . Exports of cement exceeded 1% of total U.S. production. Nearly all exports service the neighboring Canadian Market. In 2007, the United States exported 1.6 million metric tons of cement to Canada.

Heavy reliance on imports to satisfy consupmtion subjects the United States' market to sometimes volatile global economic conditions regarding the availability of foreign cement and ships used for importing cement (dry bulk carriers). As a result, the cement industry is currently engaged in aggressive capacity expansion. By 2012 more than 25 million metric tons of new capacity is expected to come on line, representing more than $6 billion in investment.

Efficiency Gains

Employment in the U.S. cement industry has declined dramatically during the past 20 years. In 2005, the cement industry employed 16,877 workers--a 23% reduction compared to 1985 levels. This drop in employment is the result of industry efforts to increase efficiency by automating production and closing small kilns. The average kiln in use today produces nearly 74% more cement than an average kiln produced 20 years ago: 532,000 metric tons in 2006 compared with 305,000 metric tons in 1986.

The cement industry has boosted efficiency by concentrating new capital investment in plants that use the dry process of cement manufacture, and by phasing out operations that rely on the more energy-intensive wet process. Since 1974, the number of wet process kilns has dropped from 234 to 47 -- a decline of 80% -- while the number of dry process kilns has only been reduced from 198 to 131. Nearly 73% of existing U.S. clinker production capacity has been built since 1975 -- all utilizing the dry manufacturing process. Currently, about 85% of the cement produced in the United States is manufactured using dry process technology.

For More Information
Information and statistics used in this summary are presented in reports compiled by PCA from various government and private sources. For additional information of the U.S. and Canadian cement industry, refer to the Economic and Market Research pages of our Web site.